Welfare spending in Scotland is forecast to grow by more than 40% over the next five years, topping £5 billion in 2026-27, according to experts.
With new disability benefits being set up in Scotland, the Scottish Fiscal Commission (SFC) said expenditure on social security north of the border could rise from £3.67 billion in 2021-22 to £5.18 billion by 2026-27.
The true figure could be higher still, as it does not include the cost of doubling the Scottish Child Payment from its current level of £10 a week to £20 – something SNP ministers have pledged to do but have not yet set a date for.
Dame Susan Rice, chair of the SFC, said: “We know that the child payment will double but we don’t have details exactly about that”.
She said while this will add to the benefits bill, it will not be on the “same scale” as the costs brought about by planned changes to disability benefits.
She warned the move from Personal Independence Payments (PIP) to the Scottish Government’s new Adult Disability Payment (ADP) from next year could have “long-term spending consequences”.
The SFC has forecast that by 2026-27, spending on this new benefit alone will reach £3 billion – £0.5 billion more than would have been spent on PIP.
It added this “significant” increase in spending is likely “because we expect more successful applications with higher average awards under ADP than under PIP”.
The SFC anticipates an extra 70,000 people will be claiming ADP by 2026-27 on top of the 400,000 who would have received PIP.
This rise in claimants could also see 10,000 more Scots becoming eligible for the Carer’s Allowance.
The SFC said: “The Scottish Government receives funding from the UK Government based approximately on what would have been spent on PIP in Scotland, so the additional costs of ADP will need to be met from elsewhere in the Scottish budget.
“The Scottish Government will either need to reallocate funding from other areas to cover social security or raise additional revenues through taxes.”
Dame Susan added “this additional expenditure on ADP will need to be met within the envelope of the Scottish budget” after the new benefit is phased in, which is due to start in the summer of 2022.
Finance and Economy Secretary Kate Forbes said the Scottish Government is “delivering a social security service based on dignity, fairness and respect, rather than taking an austerity-led approach, as the UK Government has done, where all that matters is driving down the cost of supporting those who need it most”.
She added: “Social security is an investment in the people of Scotland and we are committed to making sure everyone can access the financial support they are entitled to as we continue to roll out devolved and new benefits, including disability benefits and the Scottish Child Payment to under 16s.”